Market movers today

Markets will continue to monitor the global COVID-19 development, as global cases now top 10,000,000 and global deaths unfortunately are set to climb above 500,000 today. In particular, the US situation continues to worsen and the reopening in e.g. Texas is now on halt. We are concerned about the development in the US, as increasing COVID-19 fears may lead to a setback in the US consumption rebound.

Today, the Macron-Merkel meeting in Meseberg is taking place ahead of the 17-18 July summit. The two leaders will discuss what strategy to employ to get the 'frugals' on board with the recovery fund.

Also today, the EU-UK free trade negotiations are set to restart with talks taking place in Brussels every workday of the week. We continue to believe there will be no major breakthrough over the summer, as we are still too far away from the ‘real' deadline on 31 December 2020.

In terms of economic data releases, the European economic confidence indicators for June from DG ECFIN are due out at 11:00 CEST.

 

Selected market news

Market sentiment was sour on Friday. After equities touching year-to-date highs earlier this month, we are now somewhat in the red territory again – and that has continued overnight in the Asian session where major indices are down around 1%. Lingering uncertainties about the spreading of COVID-19 and the potential of a second wave has made investors uneasy heading into the summer. US COVID-19 cases continue to set new daily highs and several states are now haunted by second virus waves. We are yet to see states introducing lockdown measures, but the risk is notably higher, most recently after the opening strategy was put on hold in a few states, see COVID-19 update: US situation keeps getting worse, local lockdowns in Europe, stocks move lower (25 June). The risk sentiment this week is expected to be driven by a mix of COVID-19 numbers, continued central bank support and incoming information about the opening of the economies.

In support to the Chinese lending dynamics, PBOC announced that it will increase the proportion of smaller loans and credits and lower the rates, in its most recent initiatives.

Comments in the ongoing German constitutional court (GCC) case against the ECB are intensifying. During the weekend, ECB board member Schnabel gave another speech targeting the German audience, while GCC judge Hüber said that they are no longer involved but leaving it to the responsibility of the Bundesbank.

With 80% of the votes counted at the time of writing in the Polish general election yesterday sitting President Duda has received 46% of the votes. As widely expected, they fall short of the 50% threshold required to win the election and hence a 12 July run-off against Trzaskowski (28%) should decide the result of the next presidency.

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